Court Rules Arizona Cities Can Tax Online Travel

An Arizona appeals court found Phoenix and other Arizona cities can impose taxes, retrospectively, against online travel companies.

The court decided that online travel companies must pay local taxes because they fit the definition of travel brokers. This court ruling says that, just because the business is conducted primarily through the internet, it does not mean they can avoid paying tax.

In 2014, Arizona cities assessed a tax against online travel companies for an eight-year period between 2001 and 2009. The tax was assessed under two ordinances: one on gross income from operating a hotel charging for lodging or lodging space, the other on other non-hotel lodging.

The businesses appealed, but the superior court found in favor of the cities — saying online travel companies are liable for tax.

The appeals court agreed and said the tax can be imposed retroactively.